Business Models Archives - Creative Connectivity

A world without 14 nanometres. Or how things could fall apart.

I recently wrote about how our current generation of technical achievements is critically dependent on just one company in Taiwan. TSMC is the only chip company in the world that is capable of making the most advanced chips that drive our latest smartphones and data centre servers. Without them, we might need to wait another five years for AI or 6G to progress, and Apple would probably be unable to make anything more recent than an iPhone 12.

It’s an example of how so much of what we rely on is bottlenecked by a single company. In this case, it’s also a single country, as it’s proving difficult to replicate TSMC’s engineering experience outside Taiwan, despite hundreds of billions of dollars being thrown at the problem. These bottlenecks aren’t uncommon. They may be due to a company that make a component, a company that makes the tools to manufacture that component, or even the raw materials. If any part of this chain is disrupted, things will start to fall apart.

We saw some elements of this during Covid, but those were mostly supply chain issues, where things were in the wrong place. Manufacture didn’t stop; shipping became difficult and some industries failed to plan for the resulting extended lead-times. But what if, at some point in the future, manufacturing did stop?

Has the audio industry lost its imagination?

If you read the glossy audio magazines (audio enthusiasts still buy them), or spend some time browsing Amazon, you’ll see an audio industry which appears to be in good health. Depending on your personal preferences you can get something that’s smaller, shinier, lossless, retro, or virtually any adjective you can think of. But if you strip off the marketing glitz, it’s questionable whether audio quality has improved much in the last seventy years.

For the first 25 years, families huddled around horns. Then, in 1925, loudspeakers appeared, bringing sound to everyone in a room. The industry spent the next quarter century improving quality, to the point where most music lovers thought that audio reproduction was about as good as it was going to get. 1950s and 60s novels were populated with characters enthusing about their preamplifiers and graphic equalisers as they listened to the finer points of Mozart and Beethoven.

Then the focus changed. Other priorities took over, as multiple disruptions changed the way we listen to music. What’s interesting is that each of these disruptions was accompanied by a reduction in audio quality, as consumers decided that other features were more important. It’s not a message that the audio industry likes to acknowledge, as trying to push “higher” quality often seems to be the limit of their imagination. But history suggests they may be about to have another shock. So, let’s look at the reality of what happened. It all started in 1957 with:

Why Grabbing Greenland could kill 6G and burst the AI bubble

You’ve probably noticed that there’s a bit of a penchant for land grabbing at the moment. Russia wants Ukraine, Israel wants Palestine, China wants Taiwan, and now, America wants Greenland. The problem is that as more of it goes on, the behaviour becomes normalised and the international barrier to grabbing is lessened. America’s Christmas foray into Venezuela has further regularised the concept of interference, which means there’s probably a mandarin in Beijing who’s already cancelled their summer holiday and written “Taiwanese unification” on their wall calendar.

The problem with grabbing Taiwan is that it’s not just land-grab. It comes with some interesting unintended consequences, which may profoundly alter the technology balance between China and the US, bursting the AI bubble and upsetting telecoms evolution along the way.

How HP valued Humane

Last week HP announced that they were acquiring the patents and key staff from Humane for $116 million. A few years ago, I wrote an article questioning the value of patents for startups (of which more later), so it seemed a good opportunity to try to dissect the purchase price to see if it’s possible to put a value on Humane’s patent portfolio.

Humane’s not your average startup. From the start it was viewed as a potential unicorn. Its first product – the AI Pin, which turned out to be its downfall, had high ambitions. Although few reviewers appeared to notice it, if it had succeeded, it would have been the first nail in the coffin of the smartphone. The product failed to meet that promise, and the company appeared to be heading for a fire sale. Fortunately for the core team, HP saw their value and snapped them up for the bargain price of $116 million. Let’s look at how they might have worked out that purchase price.

The Superhero SIM

Almost everyone in the world knows what a SIM is. It’s the little piece of plastic with gold bits on it that makes your mobile phone work.

Almost nobody in the world knows how a SIM works.

That’s about to change, as over the next few years we’re going to see SIMs disappear. Or at least the bits of plastic with gold bits on will disappear, as the things that a SIM does get integrated inside your phone. It brings the prospect of changing the way phone contracts work, allowing your phone to do far more, and has the potential to disrupt the current business models of network operators.

The Silicon Black Swan Event

There’s a very good one act play by David Greig called “the Letter of Last Resort” (which you can listen to here). It’s based on the premise that one of the first tasks of any new Prime Minister in the UK is to write a set of letters that are sent to the Captains of our nuclear submarine fleet. In the event of their losing contact with the country, it instructs them what they should do. Options include retaliating, by firing their nuclear warheads at whoever they believe were the perpetrators, surrendering, or sailing to some other country and offering them our nuclear missiles.

It’s a gloriously far-fetched political black comedy, based on a modicum of truth. However, it’s likely that a very similar debate is taking place in a boardroom in Taiwan at the moment, as TSMC and other leading silicon chip companies debate what they do in the event of a Chinese invasion. I suspect there’s a parallel one being conducted within the Taiwanese Parliament. Should these plans ever need to be realised, it will have very serious consequences on everyone’s favourite technology and put a stake in the heart of the smartphone industry.